Evolutionary Changes Expected for Polycarbonate

22 April 2002 00:00  [Source: ICB Americas]

The polycarbonate market is becoming so large that the resin may evolve into a commodity, warned Ben Smith, Chemical Market Associates Inc. director for phenolics and nylon raw materials, during the consultancy's seventeenth annual World Petro-chemical Conference in Houston.

Mr. Smith noted that polycarbonate's market in 2000 was roughly the same size as the PET resin market in 1992, just prior to that plastic's emergence as a commodity. "The forecast for PC remains strong despite the losses seen in 2001, and the growth potential can be related to PET," he says. "The potential is present [for PC] to be a commodity in terms of volume by 2006." The main hurdles to polycarbonate's evolution into a commodity are its small number of producers, the expensive capital requirements for entering the market, sophisticated end uses, and customers' preferences for specific brands. Yet 17 manufacturing plants have come on since 1997, and Mr. Smith says the "availability of supply is greatly improving, as is the option to choose the supplier."

Most consumers are still used to buying PC by brand rather than price. In 1999 and 2000, international spot prices for PC were around $3,500 per ton for general grades, according to Mr. Smith. During 2001, lower demand and an easing of raw material costs reduced those prices to $2,700 per ton to $3,000 per ton. Pricing has fallen even further this year, as new plants have come on in Asia. "Transactions have been consistently reported below $2,000 per ton, with some as low as $1,700," he adds. "This is a 50 percent drop in price in only two years."

Polycarbonate consumption grew by more than 15 percent in both 1999 and 2000. Prior to last year's recession, polycarbonate was expected to post annual growth of at least 10 percent, with an occasional slow year of only 7 percent growth. But in 2001, consumption in Europe and the US plummeted by as much as 10 percent and 20 percent, respectively. Those two regions together account for more than half of global demand, which fell by 7 percent.

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